When a home loan says “no”, the borrower should read it as “try again”. He must make sure that there is no place for dejection because your dream home is only an approval away. And this article would tell you as to how can that be obtained even after being rejected? Well, you are required to read in order to find out.
#1 Dive deep into the details
The letter that is issued by the lender for conveying the loan denial which would most probably be a generic one. After reading that letter, you shouldn’t let the cloud of disappointment blur your thinking. Instead, you must try to understand the reason for rejection. If the letter, however, does not specify the same, you must speak to the concerned officials. You should not shy away from asking questions until you understand the exact reason for rejection of the loan. This would, however, help you when you reapply.
#2 Reduce the loan amount
If the lender has thus found, upon assessment, that the monthly income is however not sufficient in order to support the loan amount, then the application may, however, get rejected. In such cases, the borrower is supposed to rework on the amount which is to be borrowed. By reducing the loan amount the debt servicing ratio can thus be easily corrected. That would, however, make the lender confident about your loan repayment ability.
#3 Pay off your existing debts
If you have already availed multiple loans, then the chances of your existing monthly payment obligations which are getting in the way of the home loan approval would be high. This would basically lead to a high debt-income ratio. Which thus means that the debt obligations and the repayment commitments at that time are however more in comparison to the income. Any more debt obligations would, however, put the lender at risk. Paying off a couple of existing debts is, however, the best alternative in order to rectify this situation.
#4 Work on your CIBIL score
Lenders would rely on the CIBIL score and the CIBIL report in order to understand your credit history and your credit behavior. Thus delay in repayments and also defaults have a negative impact on the CIBIL score. A poor score is a reason which is enough for rejection. In that case, the borrower is supposed to obtain a copy of your CIBIL report. He is required to Seek expert advice if it is required and he is also required to work towards improving the CIBIL score. The borrower must ensure timely repayment of the existing debts and he must close open issues if any. It may thus take a while for the revised scores in order to reflect. So you must begin damage control now and should approach the lender again with a favorable score.
#5 Valuation of collateral
The valuation amount may however not be a sufficient security for the loan amount in question and the fact that it may lead to rejection. However, you must understand that the valuation amount sometimes differs from one lender to another, and thus depending on the lender policies and the third party evaluating it. In case, you are sure that the collateral that is provided is being undervalued then you should consider checking with another lender. That way either you shall have the loan approved by the other lender or you would know that the additional security is needed to be arranged.
#6 Adjust and make it work
The main factors at play when it comes to the home loan numbers are thus the loan amount, the rate of interest and the tenure. EMI’s are always calculated on the basis these factors. Thus, for the EMI in order to workout according to your income, either the tenure can be increased or the loan amount that is to be borrowed can be decreased. You must keep your mind open to all the alternatives. You must also look out for a new property which can thus be more affordable and you must also check with the other lenders for better home loans rates.
The key, however, lies in understanding the lender’s requirements and also working towards plugging the gaps, if any, which are at your end. Thus with a bit of patience, determination and also financial discipline, the borrower must rest assured that getting your home loan sanctioned will thus be a smooth process.